We study a sequential decision problem in which a firm has the option to invest in a project and can learn about the future profitability of this project prior to investment. The decision process is split into two stages. In the first stage the firm decides whether and how much to invest in...

The mothballing option has been studied in the literature, but mainly in decision theoretic frameworks. This paper looks at it from a strategic point of view and applies it to an incumbent-entrant framework. In particular, based on the recent strategic interactions between OPEC and the shale oil...